As the U.S.’s trade war with China wages on, promo firms may consider sourcing alternatives, such as Vietnam.
- Before the 90-day pause on global reciprocal tariffs, the Trump administration announced Vietnam’s reciprocal tariff rate would be 46%. That may go back into effect once the pause ends.
The Southeast Asia nation has significantly lower labor costs than its neighboring countries, with wages about half of China’s. This allows brands to reduce production costs while maintaining quality, making Vietnam a cost-effective sourcing destination.
- Brands that successfully manufacture in Vietnam include Lululemon, Nike and LEGO.
The country also has a highly skilled labor force, particularly in textiles, electronics and furniture. Many workers have years of experience in manufacturing and quality control, ensuring that brands can source high-quality products efficiently.
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Vietnam has multiple free trade agreements, reducing tariffs and improving access to global markets.
- These agreements make Vietnamese exports more competitive, benefitting businesses looking to expand internationally.
Vietnam’s strategic location near China and ASEAN markets enables faster, cost-effective shipping. Its well-connected ports (Hai Phong, Da Nang and Ho Chi Minh City) handle large export volumes, while ongoing infrastructure investments in roads, rail and ports further enhance logistics efficiency for global trade.
Key Export Categories
Textile and apparel: Vietnam’s textile industry is one of the world’s largest, exporting approximately $40.3 billion in 2023. Known for its quality and affordability, Vietnam’s garment factories produce everything from sportswear to high fashion, making it a key global hub for apparel sourcing.
Footwear: Vietnam, the world’s second-largest footwear exporter, reached $20.24 billion in exports in 2023. Its factories produce high-quality, durable shoes, making it a key hub for athletic and fashion brands.
Ricky Ho
Co-founder/CEO, SourceReady
Electronics: Vietnam’s electronics sector has rapidly expanded, especially in the northern provinces, becoming a key hub for components and finished products. In 2023, Vietnam’s top electronics exports reached $142 billion, solidifying its role in global supply chains.
Furniture: Vietnam is a leading exporter of wooden and rattan furniture, with manufacturers known for sustainable practices and craftsmanship. The furniture industry has attracted global brands due to its eco-friendly materials and skilled artisans.
Coffee: Vietnam, the world’s second-largest coffee exporter, reached over $3 billion in exports in early 2024. With 90% of its production exported, experts believe its favorable climate and lower costs could help it surpass Brazil in the future.
Challenges And Risks
Heavy reliance on China: Vietnam’s textile and electronics industries depend on Chinese fabrics and components, limiting local alternatives and increasing supply chain risks. Vietnam has limited domestic supply and lacks large-scale production for many critical materials, making it heavily dependent on imports.
Supply chain vulnerabilities: Geopolitical tensions and trade restrictions can disrupt shipments and raise costs. Raw material price fluctuations impact production expenses, especially for steel, cotton and plastics.
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Rising costs: Vietnam’s wages are rising annually, narrowing the gap with other low-cost manufacturing countries. Stricter labor and environmental regulations are adding to operational expenses. Increasing fuel prices and port congestion drive up shipping and distribution costs. Industrial land prices and electricity rates continue to rise, increasing overhead costs for manufacturers.
Skilled labor shortages: Vietnam lacks a sufficient workforce in electronics, automation and semiconductor industries, impacting high-tech manufacturing growth. Companies often import skilled labor from other countries, increasing operational costs and slowing local talent development.
- Many workers lack advanced skills in engineering, robotics and AI, creating a mismatch between industry needs and available labor.
- Businesses are investing in in-house training to develop local talent, but scaling these programs remains a challenge.
The Future Of Vietnam Manufacturing
Vietnam is improving its roads, ports and logistics to support growing exports. With new trade routes and smart manufacturing zones, the country is positioning itself as a more efficient and reliable sourcing destination.
As wages gradually rise, manufacturers are adopting automation and robotics to stay competitive. This shift helps maintain productivity while ensuring high-quality output, especially in electronics, textiles and furniture manufacturing.
Vietnam is also shifting from labor-intensive industries to high-tech sectors, attracting investments from Samsung, Qualcomm, Infineon and Amkor. With growing electronics and semiconductor production, Vietnam is becoming a key player in global tech supply chains.
The government and manufacturers are investing in renewable energy, eco-friendly materials and green factories. Companies like LEGO are leading the way with carbon-neutral production, aligning with global sustainability trends.
Ho is the co-founder and CEO of SourceReady – an all-in-one AI-powered product sourcing platform. PPAI members can use the code PPAI at sign-up to receive 10% off the paid plan of SourceReady.
